LifeStance Health Group Inc (LFST) 2025 Q4 法說會逐字稿

Good morning, and thank you for standing by. My name is Tina, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the LifeStance Health fourth-quarter 2025 earnings call. (Operator Instructions)

It is now my pleasure to turn today's call over to Monica Prokocki. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to LifeStance Health's fourth-quarter 2025 earnings conference call. I'm Monica Prokocki, Vice President of Finance and Investor Relations. Joining me today are Dave Bourdon, Chief Executive Officer; and Ryan McGroarty, Chief Financial Officer. In addition, Ken Burdick, our Executive Chairman, is also with us.

We issued the earnings release and presentation before the market opened this morning. Both are available on the Investor Relations section of our website, investor.lifestance.com. In addition, a replay will be available following the call. Before turning over to management for their prepared remarks, please direct your attention to the disclaimers about forward-looking statements included in the earnings press release and SEC filings.

Today's remarks contain forward-looking statements, including statements about our financial performance, outlook, business model, and strategy. Those statements involve risks, uncertainties, and other factors, as noted in our periodic filings with the SEC, that could cause actual results to differ materially.

Please note that we report results using non-GAAP financial measures, which we believe provide additional information for investors to help facilitate comparison of current and past performance. A reconciliation to the most directly comparable GAAP measures is included in the earnings press release tables and presentation appendix. Unless otherwise noted, all results are compared to the comparable period in the prior year.

At this time, I'll turn the call over to Dave Bourdon, CEO of LifeStance.

Thanks, Monica. Thank you all for joining us today. 2025 was an exceptional year for LifeStance. We delivered robust organic revenue and visit growth, driven by continued expansion of our clinician base, as well as noteworthy improvements in productivity, all of which translated to delivering on our mission of expanding much-needed access to outpatient mental health services. As a result, our team of 8,000 clinicians delivered care to over 1 million patients and conducted nearly 9 million visits during 2025.

It starts and ends with the quality care delivered by our LifeStance clinicians. Patients continue to provide great feedback on their experience. In 2025, LifeStance achieved a patient Net Promoter Score of 84. Our over 570 centers maintained consistently high Google ratings, averaging 4.7 stars.

In terms of financial results, this was a year of outperformance, milestones, and records for LifeStance. For both the fourth quarter and the full year, we once again exceeded each of our guided metrics, capping a year of consistent outperformance. We generated mid-teens revenue growth for the full year through clinician growth of 9%, as well as a remarkable 7% improvement in clinician productivity in the second half of the year.

We achieved double-digit Adjusted EBITDA margins for the full year for the first time as a public company, a milestone that reflects both the operating leverage in our model and the consistency of our execution over the past three years. We delivered positive net income and earnings per share for the full year, reaching this key milestone as a public company one year ahead of our expectations.

Finally, 2025 was a record year for free cash flow generation, demonstrating the strength of our operating model and our ability to invest in the business while creating long-term value. Ryan will provide more color on our financial performance. Our results in 2025 bolster the confidence we have as we carry strong momentum into 2026.

Turning to operational execution. We made great strides in 2025 to drive improvements in the performance of the business. Earlier in the year, we outlined several initiatives designed to better fill the time clinicians make available to see patients. As these initiatives were implemented, their impact became increasingly evident in the back half of the year. For example, we implemented process improvements around clinician scheduling to better utilize available capacity. We also launched a cash incentive program that rewards clinicians for improving quality and productivity.

In addition, we expanded patient access through shortened booking lead times, which improved show rates and made enhancements to conversion of phone call to booked appointments by new patients. We also strengthened patient engagement with a new platform that enhances patient acquisition and retention. These initiatives have now delivered consistently improved results since implementation in the back half of the year, reinforcing the durability of the improvements.

Turning to technology. 2025 marked an important year of progress in how we use digital tools to support patient access, clinician experience, and operational efficiency. Throughout the year, we applied digital and AI solutions in targeted, practical ways to improve the experience for both patients and clinicians. From a new patient phone booking perspective, we implemented a new AI technology solution to support our scheduling team, which facilitated stronger appointment conversion and operational efficiency.

We are improving the clinician experience and enhancing the care our patients receive. An example of this is we piloted AI-assisted documentation for clinicians. The early results show reduced administrative burden and cognitive load, enabling clinicians to work more efficiently and spend more time on patient care, while also supporting improved satisfaction and retention.

We are also using digital and AI tools that are benefiting operational excellence, including Revenue Cycle Management. Examples of this are the digital patient check-in tool, AI, and Robotic Process Automation that were instrumental in delivering strong cash collections. Overall, our approach to technology in 2025 was intentional and disciplined, using digital and AI for business enablement and decision support to drive engagement, productivity, and scale while improving the satisfaction for patients, clinicians, and our non-clinician teammates.

Turning to 2026 and beyond, we will continue building on our progress in advancing our operational and clinical excellence by focusing on several initiatives that support our long-term growth and scalability. First, we completed our EHR discovery process and made a decision to transition to a best-in-class vendor. This is an important step in advancing our long-term operating model and positioning the business for continued scale. The new EHR will be instrumental in supporting clinicians and patients to improve both their experience and clinical outcomes. We expect the new EHR to improve interoperability, which will benefit growing health system partnerships. We will begin working through the implementation in 2026 and expect the transition to the new EHR during 2027.

Second, technology will continue to be an important enabler to delivering on our commitments this year, with an emphasis on applying AI and digital tools. We expect to build on the progress we made in 2025 by expanding technology solutions that improve access, clinician productivity, and operating efficiency. We are starting the year with additional use cases in customer service and Revenue Cycle Management, along with expansion of initiatives like AI clinical documentation and workflow management.

Third, we remain focused on attracting new patients and better converting those inquiries to visits. An example of this is provider and partner referrals, a core differentiator of our growth model. We are making additional investments in this channel in 2026 through increased talent resources to support that opportunity with a new operating model that improves local market support. In addition, we have seen improved online conversion of new patients with our care matching pilot and expect to implement it across all of our state practices this year.

In closing, I'm very proud of the progress we have made as a company this year. As we enter 2026, we do so from a position of momentum and confidence. Looking ahead, we are well positioned to meet the increasing demand for high-quality mental health services and patients moving to insurance from cash pay for affordability. We will continue to extend our leadership and outpatient mental healthcare by pairing continued innovation with disciplined execution.

Before turning it over to Ryan, I want to take a moment to acknowledge Ken Burdick. Ken has been and will remain an integral part of LifeStance's journey. In addition, I appreciate and value his continued mentorship. I'd like to turn it over to him to share a few words regarding a change in his role at LifeStance.

Thanks, Dave. I transitioned to the executive chair role in March of 2025. During the past year, I have been incredibly impressed with the way in which Dave has stepped into the CEO role and Ryan has taken the reins as CFO. The performance of the business in 2025 speaks volumes of their leadership and the quality and cohesion of the entire leadership team.

In light of the confidence that I and the entire LifeStance board have in the leadership and direction of the business, I will be transitioning to the role of non-executive chair of the LifeStance board next month. I could not be more proud of Dave and his team, nor could I be more confident about the future for LifeStance. The financial and operational discipline that has been incorporated into the culture of purpose and passion that has always existed at LifeStance Health, is a powerful combination that will drive sustained success for years to come.

With that, I'll turn it back to the team. Ryan will now walk you through the financial results.

Thanks, Ken. I'm pleased with the team's operational and financial performance in the fourth quarter, which exceeded our expectations. We delivered solid growth across revenue and visit volumes, as well as a record Adjusted EBITDA margins driven by operational discipline. For the fourth quarter, revenue grew 17% year-over-year to $382 million. Revenue exceeded our expectations, primarily due to better-than-expected total revenue per visit and, to a lesser extent, visit volumes.

Visit volumes of 2.4 million increased 18% year-over-year. The outperformance was primarily driven by better-than-expected clinician productivity, our visits per average clinician increased 7% year-over-year.

We grew our net clinicians by 44 in the fourth quarter and 657 for the full year, bringing our total clinician base to 8,040, representing growth of 9% year-over-year. The level of net clinician adds in the fourth quarter was based on an intentional effort to balance the existing capacity of our clinician base and new clinician hires. This strategy was effective, as demonstrated by the strong visit and revenue performance in the quarter, increases our confidence in this approach going forward.

Total revenue per visit of $160 was roughly flat year-over-year and modestly ahead of our expectations. For the full year, we delivered revenue of $1.424 billion, up 14% year-over-year, driven entirely by visit volumes.

Turning to profitability, Center Margin of $126 million in the quarter increased 15% year-over-year and was 33% as a percentage of revenue. This exceeded our expectations, primarily due to the revenue beat, as well as slightly lower spend. Full year Center Margin of $461 million grew 15%.

Adjusted EBITDA of $49 million in the quarter was very strong and exceeded our expectations. This 49% year-over-year increase resulted in our adjusted EBITDA as a percentage of revenue of 12.8%, the highest in our history as a public company. The outperformance in the quarter was primarily attributable to favorable Center Margin and slightly lower G&A spending than expected. For the full year, adjusted EBITDA was $158 million, increasing 32% year-over-year, with margins increasing 150 basis points to 11.1%.

We have continued to deliver on our commitment to drive operating leverage in G&A as we maintain a disciplined approach to expanding margins while supporting sustainable growth. As Dave mentioned earlier, we finished the full year with positive net income and earnings per share. This achievement was delivered a year earlier than we expected and is a key milestone in our journey as a public company.

Turning to liquidity, we generated robust free cash flow of $47 million in the fourth quarter and $110 million for the full year, exceeding our expectations due to better-than-expected earnings and the dedicated efforts of our collections team. We exited the quarter with a strong balance sheet, including a cash position of $249 million and net long-term debt of $266 million. We have additional capacity from an undrawn revolver of $100 million. We are pleased with our leverage ratios with net and gross leverage of 0.2 and 1.8 times, respectively. We have significant financial flexibility to run the business and fully execute on our strategy.

Additionally, this morning, we announced that our board of directors has authorized a share repurchase program, allowing us to repurchase up to $100 million worth of our outstanding shares. We will fund this program with cash on hand. With a strong balance sheet, meaningful free cash flow generation, and leverage levels that provide ample financial flexibility, we believe this share repurchase program is an attractive and highly efficient way to deploy capital and create long-term shareholder value. At the same time, M&A continues to be a priority, and we have resources dedicated to exploring opportunities in a disciplined manner.

In terms of our outlook for 2026, we expect full year revenue of $1.615 billion to $1.655 billion, Center Margin of $526 million to $550 million, and Adjusted EBITDA of $185 million to $205 million, with the midpoint representing 11.9% margin or almost a point of margin expansion. Our annual guidance assumes year-over-year revenue growth, driven primarily by higher visit volumes, combined with low to mid-single digit increases to our total revenue per visit.

As for phasing, our guidance contemplates a revenue split of roughly 50/50 in the first and second half of the year, with the second half slightly higher. For the first quarter, we expect revenue of $380 million to $400 million, Center Margin of $118 million to $132 million, and Adjusted EBITDA of $39 million to $45 million. In terms of earnings, the first quarter is seasonally impacted by higher payroll taxes.

Additionally, we expect stock-based compensation of approximately $60 million to $70 million in 2026. As a reminder, we announced in May that we would be sunsetting our stock-based incentive program for clinicians and replacing it with a cash bonus incentive program. The impact of this change was expected to result in a decrease in stock-based compensation of roughly $10 million per year. We are seeing this benefit for the first time beginning in 2026 and will continue to see a reduction over the next four years as the existing tranches of clinician stock vest. Regarding free cash flow, we expect to once again generate meaningful positive free cash flow for the full year 2026. Additionally, we expect to open 20 to 30 new centers this year.

As Dave mentioned, we recently completed our EHR discovery process and are moving ahead with implementation this year. During 2026 and 2027, we expect this implementation to represent a use of cash of roughly $20 million to $30 million. Much of the spend will be capitalized or adjusted EBITDA as it is non-recurring. Any P&L impact associated with these activities has already been reflected in our 2026 guidance assumption.

As we look beyond 2026, we continue to expect revenue growth in the mid-teens based on low to mid-single digit annual rate growth, combined with low double-digit volume growth. We expect to continue to expand operating leverage through the G&A line and now expect to reach mid-teens adjusted EBITDA margins by fiscal year 2028. We believe this trajectory underscores the strength of our platform, combined with favorable macro mental health trends, and gives us confidence in our ability to consistently deliver growth and expanding margins over the coming years.

With that, I'll turn it back to Dave for his closing comments.

Thanks, Ryan. In closing, 2025 was an exceptional year for LifeStance. Our results demonstrate the dedication of each of our clinicians and team members and the resilience of our model. We enter 2026 with strong momentum to continue expanding access to high quality, affordable mental health care.

Operator, we'll now take questions.

(Operator Instructions) Craig Hettenbach, Morgan Stanley.

Thanks. Just to start, Ken, echoing your comments, nice to see that the execution of the team kind of playing out and kind of the strategy. Dave, maybe just building on that, the inflection in productivity in the back half of the year and your comments about durability, can you just talk about kind of this year and as we play it forward, just how that's impacting the business?

Good morning, Craig. Thanks for the question. In regards to the productivity initiatives, and you know, we talked about a number of them throughout, especially the back half of last year. What you're seeing is the durability in those, whether it's the improvements that we've made in our phone scheduling team for new patients, the new cash incentive program that we have for clinicians that are tied to quality and productivity. You know, all those kinds of initiatives that we put in, it wasn't just a Q3 lift. We actually saw it build into Q4. We're very happy with the productivity improvements and the durability that we've seen, including as we've stepped into 2026.

Now, having said that, just at a macro level, just a reminder is that, you know, we're guiding to about 15% revenue growth in 2026, and the growth algorithm of that is still, we expect low-double digit visit growth, and that's going to come primarily from net clinician adds with some complementary benefit from productivity. In addition, we'll see low to mid-single digit total revenue per visit growth coming from the payer rate increases.

Got it. Then just as a follow-up, when you think about the path to 15% EBITDA margin, and you spoke a lot about just some of the technology investments. As a management team, how are you looking at just the ROI kind of payback and the investments you're making, like, translating into the models?

Yeah, sure, Craig. This is Ryan. I'll jump into that question. I appreciate you starting off just kind of highlighting, like, what our long-term guide is overall. Again, like, I think we've been able to demonstrate a history of delivering on our results.

As it relates to investment, we are very disciplined in our approach in kind of looking at whether it's an AI enablement solution or other technological solution, looking at the return profile of the investment and making sure that it pencils out to be able to kind of drive the leveraging that we're looking for from an operating perspective. Again, very disciplined and thoughtful process that we have in terms of looking at investments.

Great. Thank you.

Lisa Gill, JPMorgan.

Hi. Thanks very much, and good morning. I just wanted to follow up on your comments around the visits per clinician being up 7%. You made some earlier comments around digital and AI. Can you talk about how that's playing into those visits per clinician?

Yeah, Lisa, good morning. It's Dave. I'll take that one. There's really two aspects to this. The first was that we worked with the clinicians to get more capacity on their calendars, right? That they gave us more availability to be able to see patients, and that's been a multi-year journey for us, and it's really nice to see the benefits of that.

The converse of that is then the clinician said, okay, we're giving you more capacity. Now, we want you to use it. We want to see more patients. Obviously, if they see more patients, they also make more income. They were asking for us to fill more of the time on their calendars. We worked with them around schedule optimization, basic practice enablement and practice management initiatives. That was one aspect of it.

The other is then increasing the flow of new patients. We've talked about some of those things, like improving the conversion of the phone calls that we get from people seeking care to actually booking an appointment. Some of the AI tools that we put in place there last year improved that conversion rate by 5%. We have a number of initiatives that are driving improved new patient conversion.

As we step into this year, one of the initiatives that I mentioned in my prepared remarks is our new care matching algorithm and tool. We really believe by improving the matching, we improve the therapeutic alliance between the clinician and the patient. What we've seen from the early results of the pilot is improved conversion, both not only in the phone -- from phone calls, but also from online scheduling. And once we get that patient in the door, they're actually stickier, and we believe we'll see better health outcomes on the back end of that as well.

That's great. Dave, just as a follow-up, you know, in your first answer to the question, you talked about low to mid payer rates. I know, you know, one of the initiatives that Ken had was cleaning up some of the managed care relationships. Can you talk about where you are on that path? Is it where you want to be? Low to mid payer rates sounds like a positive. Do you have good line of sight to that over a multi-year period of time?

We do. First of all, we're pretty much complete on the journey of cleaning up the payer contracts. Over the last three years, we've probably reduced the number of contracts by 50%. It is a meaningful improvement. The genesis of that, or the reason we did that, was really around administrative efficiency. We wanted our team to focus on the relationships that mattered, that was really the driver of that. We've largely completed that, Lisa.

As far as the payer rate increases and the durability of that low to mid-single digit, we primarily use an approach of annual rate discussions with clinicians or with the payers. We will, from time to time, depending on the situation, lock in a multi-year arrangement, similar to like what a hospital system would do with a payer. For the most part, we're more annual contracts with the payers. We're having very constructive conversations with them. Again, feel very good about that low to mid-single digits and being able to achieve that in the coming years.

Great. Congrats on those great results.

Thank you.

Kevin Caliendo, UBS.

Thanks. Good morning, guys. Thanks for taking my question. I just want to go into the comment about the moderating the net adds in the quarter and the efficiency. Does that mean that you could have added, and this is like a more measured approach to, you know, making sure your efficiency and onboarding was in the best shape possible? Is there, like, a backlog? I guess the follow-up to that is, how should we think about the ads organically versus M&A, versus, you know, what is exciting in this new buyback that you announced, which I think will be very well received?

I'll take that one, Kevin. There's a few parts to that. First of all, as far as the Q4 clinician adds. I think what, you know, where you were going with that is, we are having an intentional balance between the adding of new clinicians versus taking advantage of the capacity that we have with our existing clinicians. Our priority is to take advantage of that capacity on the existing clinicians first, because of two reasons.

The first is that we actually believe by doing that, we'll improve their satisfaction, and eventually that'll turn into better retention. The other is, it's actually a win-win for both the clinician and the company. It's just a more efficient way for us to be able to run the business. That has been an intentional balancing act. Again, what I mentioned earlier is that we still believe, for our growth algorithm, as we step into 2026 and in the coming years, the primary driver of visits will continue to be clinician net adds. Improvements in productivity will be complementary, but not the major driver.

Then as far as M&A goes, first thing I'd want to make the point on is there's no material M&A included in our 2026 guidance. It does continue to be a priority, and we do have an active pipeline. At the same time, we're going to be very disciplined, and we're focused on opportunities that are both strategic and financially makes sense.

It's an interesting environment right now. We've seen it with the larger companies, you know, revenue in the $75 million to $250 million range. They have valuation expectations that are dislocated from reality. At the same time, as we're going down market, those opportunities seem to have more appropriate valuations. We're targeting those kinds of companies for geo expansion. I would expect to see some of those smaller tuck-ins, but again, that is not going to materially move the needle on the financials in 2026. What it does is it positions us well for future year growth.

Got it. Thank you.

Jack Slevin, Jefferies.

Thanks for taking the question. Wanted to ask about the 2026 guide and some of the commentary around the EHR implementation. I guess just looking at how some of the G&A stacks in the initial guide and appreciate sort of the conservative approach and all the execution you all have been undertaking recently. Like, it looks like the EBITDA drop-through is going to be a bit lower. I was just curious if you could speak a little more to, like, the process of implementing that EHR and if there's anything specific on the cost side we need to be thinking about there.

Sure. Jack, appreciate the question, and good morning. I'll start off with the EHR, and then I'll talk a little bit just in terms of, like, G&A in totality between 2025 and 2026 and the growth rates. First and foremost, as I mentioned on the call in my prepared remarks, the overall EHR kind of implementation, like, we wanted to put out, like, just in terms of the representation of the cash usage, and, you know, as I mentioned, it's $20 million to $30 million. Most of these costs will be adjusted through EBITDA or capitalized. Again, we're still, you know, we're in the early stages just in terms of overall, the journey to implementation of a new EHR, which we're all really excited about.

When you look at G&A in totality, when you look at '25, our growth rate was 7%, which is unnaturally low when you peg it against the growth rate of the business. If you recall, when you go back to our original guide, our original guide was closer to 10%. When you look at our full year guide from a G&A perspective, like where it implies that we're at 13%, which stacks up well against the 15% overall growth rate. You're able to leverage your operating expenses, but at the same time, it provides us flexibility as it relates to being able to continue to make the investments in growth, you know, where Craig went earlier, just in terms of capabilities to kind of that ROI and kind of pencil out. Overall, that's kind of the cause of the step up, year-over-year.

Okay, got it. Really helpful. Maybe just as a follow-up, thinking about some of the M&A commentary. I guess, to take a step back a bit, can you maybe just level set on, like, any sort of KPIs or things you think about as you look at organic growth in the business versus M&A opportunities? I would think the hurdle rates are getting higher because of the broad network you have and your sort of track record of being able to add on the organic side, but I wasn't sure if there's any way you can think about even, return profiles or other things on sort of growth via those two vectors, given where the portfolio stands right now. Thanks.

Yeah, we talked -- just talked a minute ago about M&A. I think just to pile on with a few comments. Certainly from that financial discipline perspective, we have a profile around multiples on EBITDA and things like that we have our hurdle rates, which we're not going to, you know, we obviously aren't going to publicly disclose.

We are, you know, we do have financial metrics that we're, again, very disciplined on. The downmarket opportunities are the ones that are currently the most attractive to us, and it's attractive primarily for geographic expansion. We do not see doing small tuck-ins in geographies where we already have a meaningful presence. The economics are actually much more attractive for us to just grow those organically.

Okay, helpful. Appreciate the color.

Richard Close, Canaccord Genuity.

Thanks for the question, and congratulations on a great year. You know, Dave, in the past, you talked about a differentiation and optimization phase that included, I guess, several strategies, like specialty services expansion. I'm interested in how that has progressed. Also becoming the referral partner of choice, just, you know, what you're doing there, you know, maybe more details in terms of payer relationships and provider organizations, you know, with respect to referrals.

Thanks for the question, Richard. There's a number of components there, so I'll try to hit them all. First of all, to your point around specialty services, that is an important part of our future growth story, and we're doing that because what we want to be able to do is holistically treat the patient. Whether it's therapy, psychiatry, the kind of those core services, or if they need additional services like neuropsych testing, or if they have treatment-resistant depression, and, you know, they need to step up in care in regards to, like, a SPRAVATO or TMS or things like that. This is all about treating the patient holistically and driving to a better health outcome.

Specific to specialty, just to ground you know, previously we had talked about it as about $50 million of revenue. We are targeting $70 million of revenue for 2026, so about a 40% increase. That's consistent with how we've talked about that business segment in the sense of that it would grow at a rate larger than our core book of business. That growth is primarily coming from those treatment-resistant depression services of SPRAVATO and TMS.

Just a couple of things I'd mention is this is low capital intensity. What we're doing is we're leveraging our existing centers. Again, we just think this is a tremendous opportunity for us in the coming years, and it's going to contribute to both growth and margins. That was on the specialty.

In regards to being the partner of choice, you know, I'm going to stick primarily to the medical providers because we addressed that a little bit in our prepared remarks. We're continuing to invest in those resources, everything from a technology perspective and how we interface with them and the unique requests we get from, for example, a health system, as well as we're investing in additional feet on the street. We've implemented a new operating model to make those resources even more local, to be able to support our state practices and drive increased referrals from the medical practices. We feel really good, we feel really good about that.

You know, we also mentioned last year the new Calm relationship, I think that was more about the signal of a different kind of referral partner than our typical PCP or hospital system or those kinds of referral sources. I think it's just an exciting example of a different opportunity that we think we're uniquely positioned for because of our large scale, you know, the focus on the patient experience and outcomes, as well as our hybrid model of both in-person and virtual. Those kinds of services and characteristics are very appealing to some of these national digital players.

Okay. Thank you.

Ryan Daniels, William Blair.

Hello, this is Matthew Mardula on for Ryan. Thank you for taking the question. I just want to kind of touch up on the answer to the last question. So can you kind of provide an update on how the patient referral segments have been trending? How should we think about the momentum with patient referrals into 2026? I know demand outpaces supply in the industry. I do want to focus on those newer initiatives, like the partnership with Calm, additional investments of the provider and partner referrals for 2026. Now this is the kind of big main point of my question. Are you expected to see maybe a newer or a different type of patients because of these patient referral segments? Thank you.

This is Dave. I'll take that. In regards to the referrals, this is a primary channel for us to get new patients. It's one of the things that differentiates LifeStance versus many of our competitors in the outpatient mental health space. We only spend about 2% of our revenue acquiring new patients, and that's a very efficient model. The way we're able to do that is through these referral programs with the medical practices, and that continues to grow, I'd say, commensurate with the business. I wouldn't point to anything that's unique there that from a growth rate perspective.

In regards to the update on Calm, it's still early days on that relationship. I think both sides, we're still working together to optimize that partnership. We are getting new patient volume from the Calm relationship, but it is not to a level that is very meaningful at this point. We expect it will build in the coming months and years, but it's not something that is going to meaningfully move the needle for us in 2026.

Then as far as the demographics go, it's one of the reasons that the partnerships with some of these large digital players like Calm are intriguing to us because we do believe that that will attract a younger, more digitally native type demographic than what we've historically had at LifeStance. So it's a completely different demographic.

David Larsen, BTIG.

Hi. Can you please talk a bit about the EMR? Like, who are you using now, who are you going to be switching to? What capabilities do you expect to get from this new EMR? For example, will the workflow be easier? Will this contribute to even more physician productivity? Any thoughts on, like, reporting from the new EMR? What do you hope to get from that one that you don't get from your existing one? Thank you.

Yeah, all of the above, David, thanks for the question. First of all, we have a practice. We do not mention other companies on our earnings call, so I'm not going to talk about where we are today or where we're going from an EHR perspective. Take it up a level. We put a lot of work in over the last year in regards to the discovery process, which we've now completed, and we have decided upon a new EHR vendor, so a new one, and we'll be going away from our existing one.

It is foundational for the future. It goes to your question of what we're trying to get out of it. I mean, at a high level, it's about unlocking advancements in both clinical and operational excellence. Yes, from a clinical perspective, it's going to improve workflows. I think of things like care pathways and that next best action to support our clinicians, to being able to tie in new AI point solutions, things like that, as well as a much better patient experience, both from an administrative as well as a care perspective. There's a lot around the EHR that is core and foundational to where we want to take the company over the next five years. We're going to begin the planning now and throughout this year, and then we expect the rollout to be next year.

That's great. That's very helpful. Thank you. Then with regards to, like, the payer relationships, a lot of times, like, health plans will view mental health providers as, like, ancillary providers. They'll spend a lot of time with, like, the large acute care medical centers, maybe some of the large physician groups. Mental health, based on my experience, has been more of a price taker from the handful of large, dominant commercial plans in each city. Can you maybe just talk about that?

Are you a price taker where they're like, okay, here's the mental health rates, here's the fee schedule, that's what you get, or is it much more of a collaborative approach? Just any discussion around, like, the quality care you're providing to the patients, fewer ER admissions, improvements in cost of care. Thanks very much. I just want to make sure you're not a price taker. Thanks.

Yeah, I mean, as far as the payer relationships, what I, you know, I said earlier is, we're having constructive conversations with most payers. There's always going to be tension. There's tension in all providers across the entire healthcare ecosystem and payers. So it's, you know, that's a normal level of tension.

The thing that I would point you to in regards to outpatient mental health is that the payers are still getting a lot of pressure from their employer clients and their members for access to in-network outpatient mental health care. That's really the balance to the pricing conversation and what leads to those constructive dialogues. For the more thought-leading payers, the ones that are now thinking about quality and outcomes in addition to access, those are the payers that I think have really gotten their head around the mind-body connection, and that there is opportunity for even increased mental health utilization, leading to a total cost of care reduction.

Thanks very much. I'm a big believer, obviously, in mental health and how it can keep people productive and at work and improve the total health of the market. Thanks very much. Congrats on a good quarter.

Thanks, David.

Peter Warendorf, Barclays.

Thanks for the question. I just wanted to touch on the 20 to 30 new center adds that you guys are expecting this year. I know you said that the costs are accounted for in guidance, but is it right to assume that those come on with lower margins? Just trying to get a sense for kind of the cadence of margins throughout the year. Thanks.

Yeah, Peter, this is Ryan. Appreciate the question. You got it right. Like, overall, 20 to 30 new centers, they do come on with a lower margin profile, but that's fully contemplated in the guidance in what we put out to the market. Again, like, we look at it as a very nice accelerator to, like, overall growth strategy in terms of where we decide to plant a flag for a new center. Again, very -- the return profile is relatively quick on them, too. You know, again, you get the initial piece where it's lower, but then it gets up to normal at a relatively fast pace.

Got it. Thanks. Maybe just one quick follow-up from a high level on the competitive landscape. I mean, are you seeing anybody get more or less aggressive? Is there anything worth calling out on the competitive landscape early in the year?

I wouldn't point out anything in particular that's new in the competitive landscape. First of all, it is and remains a very competitive environment for attracting and retaining clinicians. They have lots of choices. That's not new. That's the environment we've been in now for years. When I think about the competitive dynamics, because it is such a fragmented industry, it is really a very local conversation. At the local level, we have competitors, but there's not anyone across the nation that I would flag for you.

Great. Thank you.

Steve Deckert, KeyBanc.

Thanks, guys, for the questions. Congrats on a solid quarter. I just wanted to ask one around visits per clinician. Sequentially into 2026, how should we think about the move into 1Q from the level you were at in 4Q? Thanks.

Appreciate the question. This is Ryan. Overall, when you look into 1Q overall -- maybe I'll just tackle this from a overall kind of revenue perspective, and then we can kind of get into, like, the contribution just in terms of how to think about productivity versus net clinicians. When you look at the revenue step up from Q4 to Q1, it goes up approximately $8 million, which is 17% year-over-year, which I went through on the prepared comments earlier. When you think about the actual step up in visit volume, really, you can think of that as net clinician, where Dave went earlier, just in terms of being the driving force between the sequential growth and then supported by rate, right, overall.

Those are kind of the key components as you kind of build from Q4 into Q1. As Dave mentioned, like, we have high confidence just in terms of the durability as it relates to productivity, in terms of what we're doing from a practice management perspective around the productivity, as an enabler there.

Okay, thanks. I want to ask one around free cash flow. I think previously, you guys had guided to it being down in '25 but was actually up. Just wondering, did any of those de novos in '25 get bumped into '26? Are you expecting free cash flow to be up in '26 versus '25? Thanks.

When you look at just there's always the timing and movement between new centers, just in terms of being able to fully execute on the implementation. I'd call that, like, relatively minor. When you think about the 20 to 30 centers, kind of consistent with what, you know, we've been doing here for a bit. When you talk about free cash flow, free cash flow did exceed our expectations in 2025, so at $110 million, versus 2024 was $86 million.

As we think ahead, and Dave went through this earlier, this is a super capital efficient business that we have. We expect to be positive again in 2026 as we continue to grow our adjusted EBITDA, kind of consistent with the guidance that we put out there. Again, like, this is a relatively new phenomenon for us, being for the last two years, being free cash flow positive, and we're pleased with the progression and happy to be able to our expectation being that we'll again be free cash flow positive in 2026.

All right. Thank you.

Sean Dodge, BMO Capital Markets.

Thanks. Good morning. Dave, your comments on technology and using that to drive savings, I'd imagine a big chunk of your costs are related to the clinicians and occupancy costs. If we add up all the support costs, the things you mentioned, like, the scheduling, credentialing, the revenue cycle, like, all the labor-intensive stuff, what proportion of your cost base is that? So things that are addressable or impactable with technology over time. Then maybe how much of that you think you can actually drop out over the coming years? Then just maybe any thoughts on, you know, kind of like what inning we're in with all this?

Yeah, Sean, this is Ryan. I appreciate the question there. I think I would, like, kind of handle this question by grounding you again, just in terms of our long-term growth algorithm. As it relates to, Dave went through this, mid-teens revenue growth, we expect Center Margin to expand out to mid-30s from the low 30s where it sits today. Part of the Center Margin expansion is from leveraging things like your occupancy costs. You get down to the G&A line, and overall, that's where, you know, with the new part of our long-term guidance that we put out today, is expect to be in mid-teens EBITDA by 2028. You can think of that both from expansion of Center Margin plus the G&A line.

In the G&A line, that's getting at the crux of your question, just in terms of being able to drive efficiencies, to be able to pull out, to be able to get the leverage. We feel really confident in our ability to be able to do that. We've proven our ability to be able to implement technology, to be able to drive an overall lower expense base.

Okay, understood. Thanks.

With no further questions in queue, I will now turn the call over to CEO, Dave Bourdon, for closing remarks.

Hey, thank you, operator. I'd like to thank our nearly 11,000 mission-driven teammates who make sure that our patients get the quality care that they need and they deserve. I continue to be inspired by the passion and the resilience that you all bring every day. Our services are needed more than ever, and we look forward to furthering the positive impact that we can have on the millions of Americans whose lives can be improved by the high-quality mental health care services that LifeStance provides. Thank you for joining us today.

Operator, that'll conclude our call. Thank you.

Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.